When you collect references on job applications, do you actually check the applicant's references? Believe it or not, many employers don't even use the references that they collect. And, if they do, they don't always ask the right questions. If you want to hire the right people, this needs to change.

Why References Need to be Checked

In the past, reference checks have been little more than formalities. They were once used right before extending a job offer, just to verify that the individual did indeed work for a particular company or hold a specific position. However, times have changed. The reference check is now one of the most important aspects of the hiring process.

According to a survey of more than 1,000 senior managers at companies with 20-plus employees, one in every five candidates is removed from consideration after the reference check process. This means that, without a strong reference check process in place, your business has a 20 percent risk of hiring the "wrong" candidate.

A properly executed reference check allows you: (a) to verify that the individual is who he or she claims to be, (b) to gain insight into how he or she is viewed by peers, and (c) to find out information that the candidate didn't provide in his or her application, resume, or interview.

In most cases, a failure to check references is nothing more than laziness. While the process is anything but fun, it's a responsibility that all business owners should take seriously. It could mean the difference between a thriving company with a strong corporate culture and a deteriorating business with poor work ethic and hostile relations.

Five Questions Worth Asking

There are many different things to think about when establishing a reference check process, but the first thing that you'll need to do is to develop a list of go-to questions that allow for an honest glimpse into the candidate's background and personal makeup. Here are a few questions that you should always ask:

1. What is Your Relationship to the Candidate?

The very first question that you need to ask is what the reference's relationship is to the candidate. Applicants will often select people who are close to them - such as friends or family members. While these individuals certainly know the applicant well, they are also quite biased. You want references who know the candidate but aren't emotionally attached.

2. Do You Know the Candidate Outside of Work?

This is the perfect follow-up to the previous question. A reference may say, "I'm her boss," but that doesn't totally exclude the possibility of a bias. Perhaps the reference is the candidate's boss and best friend.

By asking the reference if he or she knows the candidate outside of work, you're forcing him or her to acknowledge any potential relationship that hasn't been disclosed. However, it should be noted that just because a reference knows the candidate outside of work, he or she shouldn't be discounted altogether. Just take this into account when listening to his or her assessment.

3. Does the Candidate Always Show Up on Time and Work Hard?

If you ever want advice on how properly to conduct a reference check, meet up with a local landlord, and pick his or her brain. Landlords don't have the luxury of being passive with reference checks. One bad tenant can mean months of expensive legal battles, court filings, and, ultimately, an uncomfortable and costly eviction.

A favorite question among landlords is, "Does the candidate always show up on time and work hard?" At first glance, this may seem like a standard question, but the answer reveals a lot of valuable information.

An employee who always shows up on time and puts in maximum effort has his or her priorities in the right place. An employee who's late and consistently slacks off is just going through the motions and really couldn't care less about his or her output or efficiency. He or she is just cashing a paycheck and moving on. The answer that you really want to hear is, "Yes, she's always the first one in the office and the last one to leave."

4. What are the Candidate's Strengths and Weaknesses?

A strengths and weaknesses question is important. Definitely listen to the strengths portion, and record what the reference says, but really listen up for weaknesses. You likely already know the candidate's strengths (since he or she brought them up during the interview or highlighted them on his or her resume), but weaknesses probably weren't focused on much.

When listening for weaknesses, think about which ones can be corrected over time with proper training and management. Then, think about the other ones that are hard to overcome. If these latter weaknesses directly conflict with the role of the position, then some warning flags should begin to fly.

5. Would You Rehire the Candidate?

Finally, would the reference rehire the candidate (or work with him or her again in the future)? Listen for the immediate reaction. Most will eventually give you a "yes" answer, since they want to avoid conflict, but you can tell a lot by how he or she responds in the first couple of seconds after the question is posed.

If there's a delay, or he or she begins with a word like "well," these are indications that there's some hesitancy. However, if he or she immediately responds with a resounding "yes," then you can feel confident in his or her answer. The key is to dig below the surface, and find the true answer.

Reassess Your Hiring Processes

Hiring is one of the most important responsibilities that a business owner has. While your company's products and operations may be strong, the reality is that your business will only go as far as your employees take it. If you hire the right people, you'll be successful. If you hire the wrong people, then you'll eventually end up somewhere that you don't want to be.

There are many different aspects to the interviewing and hiring processes, but one of the most important responsibilities is reference checking. These references will tell you a lot about the individuals and provide a better picture of who the applicants really are beyond their resumes. Keep these questions in mind, and make reference checking a priority as you move forward.